Personal Capital Review 2018: The Leading Robo-Advisor

Personal Capital is the leading digital wealth managers today with free financial software and free financial tools for everyone to use. I’ve been working with San Francisco-based Personal Capital since their founding in 2011. As a result, I’ve spent over 1,000 hours getting to know senior management, understanding their company DNA, and their strategy going forward.

Personal Capital has come a long way since its founding and now manages over $7.5B in assets under management for clients and tracks over $250B in assets for users of their free financial tools. This Personal Capital review provides the latest company update as of 2H2018.

Personal Capital Company Overview

Total Equity Funding: $215.3M in 8 Rounds from 12 Investors as of 2018. Latest funding was for $40M on August 1, 2017 by IGM Financial after they already invested $75M in 2016.

Headquarters: Redwood City, California with offices in Denver and San Francisco

Description: Personal Capital is the leading digital wealth management firm.

Personal Capital is an online investment advisory platform that provides its clients with electronically facilitated wealth management services, objective advice, and strategies. Personal Capital’s charges are based on a percentage of assets managed by the platform, including wealth management, trade costs, and custody. Personal Capital summarizes its users’ bank accounts, credit cards, mortgages, and other financial details together in one place. The platform also highlights its users’ long-term fiscal health over month-to-month spending with tools such as a visual graph of their investment allocation and a 401(k)-fee analyzer.

Personal Capital Management

Bill Harris is now solely Chairman, while Jay Shah got promoted to CEO on April 24, 2017. Mike Arnsby was added as CFO in 2016. Mike helped take Yodlee public in 2015.

Personal Capital Funding History

Personal Capital has had eight rounds of funding, totaling $215.3M

Personal Capital Latest News

I had lunch with Mark Goines, Vice Chairman and Eric Weiss, Chief Marketing Officer in San Francisco to get an update about their operations as of 2H2018. Personal Capital has grown to over 300 employees with a new office in Atlanta, Georgia. They also run roughly $7.5 billion in client assets under management, while tracking over $250 billion in assets from users who use their free financial app. I highly recommend everybody sign up to track their net worth, analyze their investments, and plan their retirement cash flow. The firm is clearly doing well and will be around for a long time to come.

* Surge in assets under management. The noteworthy $7.5 billion in assets under management as of 2H2018 is up from $5 billion in 2017, and from just $2 billion at the start of 2016. In other words, their asset gathering has accelerated for those who utilize Personal Capital to manage their money.

* Key personnel hires. Personal Capital hired Mike Armbsy, ex CFO of Yodlee to be their new CFO. Mike was responsible for helping Yodlee go IPO in 2014. In addition to Mike, Personal Capital welcomed Paul Desmarais of Power Financial Corporation to their Board of Directors. Paul is intimately familiar with Personal Capital as he helped lead Power Financial’s $75 million investment in their Series E financing last year.

These two key hires portend to a potential IPO down the road. These hires contrast to other fintech companies who are losing key personnel to competitors. Total headcount has increased to 300 as of 2H2018, up from 233 as of February 2017.

Personal Capital, founded in 2011 by the former CEO of Intuit and Paypal, has the best free financial software today for people serious about achieving financial freedom sooner, rather than later. If you’ve haven’t done so already, I highly recommend you sign up. The more you are on top of your finances, the better you can optimize your wealth.

Eight Reasons To Use Personal Capital

1) Simplicity And Less Stress. Before Personal Capital, I had to log into eight different financial institutions to track over 30 different financial accounts ranging from brokerage accounts, money market accounts, CD accounts, checking accounts, IRA, and my 401K. My finances were a mess, and I’m sure your finances could use some organization as well. Now I can just log into Personal Capital to see how everything is doing in one place. It’s important to have a holistic view of your overall financial health so you know where to allocate resources.

2) Net Worth Overview. Gone are the days where you have to use an Excel spreadsheet to manually update every single asset and liability line item to calculate your net worth. Personal Capital updates your net worth automatically as soon as you log in because all your accounts are linked. They provide a pie chart of your assets as well as gives you a historical chart of your net worth progression. If you cannot find an account in their database, you can simply add it yourself. Personal Capital will also conveniently e-mail you a weekly snap shot of your latest net worth along with how the markets did, upcoming bills, latest insightful blog posts and accounts that need your attention. Below is a sample headline snapshot.

3) Tracks Your Cash Flow. Budgeting is personal finance 101. By tracking your income and your spending like a hawk, you will be able to save a lot more money than if you simply tried to guess everything. Think about all the times you withdrew cash from the ATM machine and had no idea where all the money went a couple days later. Aggregating all your accounts allows you to see where all your money is going. In the example above, this entrepreneur brought in over $38,000 in income and spent only $3,096. Now that’s great cash flow!

4) Helps You Balance Risk. With so many accounts, it’s often hard to see exactly what’s going where. For example, so many people were too overweight stocks before the financial crash in 2009. With Personal Capital, you can easily see where the imbalances are in your net worth so you can make smart adjustments. Now that it’s a bull market, investors are probably too overweight equities and way underweight bonds once again. The Investment Checkup tool analyzes your portfolio’s holdings based on size, style, and sector. Personal Capital excels for those who have assets in the stock market. Personally, I like to maintain a 35%, 35%, 30% split between stocks, real estate, and CDs/bonds.

5) Helps Reduce Fees. One of my favorite tools Personal Capital provides is their Portfolio Fee Analyzer. I ran my 401K through their fee analyzer and discovered that I am paying over $1,750 a year in management fees. I had no idea that my Fidelity Large Cap Growth fund cost $1,200 a year due to a 0.74% expense ratio compared to sub 0.3% for my Vanguard Funds. As a result, I found a similar Large Cap index fund instead and am now saving $1,000 a year. Without Personal Capital, I would have spent over $87,000 in excessive fees over the next 20 years. Take a look at my example below. Portfolio fees are a serious problem which will rob you of your retirement wealth if you are not careful. Don’t let ignorance rob you of your financial well being.

6) Shows Your Portfolio’s Investment Efficiency. Based on your risk tolerance and investment objectives questionnaire, Personal Capital will give you an idea of where your current allocation is on the Efficient Frontier Curve. The Efficient Frontier Curve is the best returns for a certain level of risk. You want to be on the curve and not above or below.

7) Recommends Specific Dollar Amounts To Invest. Financial advice is useless if there is no actionable advice. Personal Capital will recommend the specific dollar amounts to invest or reinvest in each asset class to get you to an optimal asset allocation. In this example below, the investor is too heavily weighted in cash. In order to get to his recommended target allocation the investor needs to increase stock holdings by roughly $200,000 and bond holdings by roughly $100,000. The fun part is figuring out which index funds to invest in each category. All investment related charts and analysis can be found in the Investingtab.

8) The Best Retirement Planning Calculator. Personal Capital has the best retirement calculator on the market because it uses real data and Monte Carlo simulations to come up with the most realistic financial scenarios for your future. Other calculators simply ask you to guess input values to then come up with your financial future. The problem with this method is that we often underestimate how much we are saving and spending. You can input different life events such as a wedding or home purchase in your cash flow statement and recalculate your financial future to see how you’ll do.

Leverage Technology to Build Greater Wealth

Get a handle on your finances by signing up with Personal Capitalfor free and aggregating all your accounts. The financial management tools are free, takes less than a minute to sign up, and allows you to even find a personal financial advisor if interested. I spent the past 13 years meticulously tracking my own finances to achieve financial freedom. If I discovered Personal Capital earlier, I think I would have reached freedom even sooner!

About the Author: Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.

FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1 million pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.

PRIVACY: We will never disclose or sell your email address or any of your data from this site. We do highly welcome posts and community interaction, and registering is simply part of the posting system.DISCLAIMER: Financial Samurai exists to thought provoke and learn from the community. Your decisions are yours alone and we are in no way responsible for your actions. Stay on the righteous path and think long and hard before making any financial transaction! Disclosures